Has a real estate agent told you they have a pocket listing just for you? What does that mean and is it really the best deal?
A pocket listing is a real estate industry term where a listing broker holds a listing agreement with a seller and both sides agree not to advertise the property. Pocket listings are not on the local Multiple Listing Service and there will be no sign in the yard indicating the property is for sale as a pocket listing.
The pocket listing is a unique arrangement where a seller has asked the listing broker to only show their home to a limited number of people. The pocket listing works well for celebrities and other high profile individuals who want to sell multi-million dollar properties without dealing with the inconvenience of having hundreds of people walking through their home. This type of listing is also financially beneficial for the listing brokerage since they are representing both the seller and the buyer in the transaction.
Does A Pocket Listing Benefit The Buyer?
- If a listing is not available on the local Multiple Listing Service or advertised, a Buyer will "find" a pocket listing through the Brokerage listing the property. This means the Buyer will enter into a dual agency agreement purchasing a home from the Brokerage that is already in a contractual agreement with the Seller.
- If a buyer makes an offer on a pocket listing, will their agent work on their behalf to get a good deal on the price of the home? Will the agent negotiate on the buyers' behalf if items are found during the home inspection that need repair or a seller credit?
- Again, if a buyer makes an offer on a pocket listing, will their agent provide comparable properties for review so the buyer can be confident that the pocket listing price is fair?
- If you are the buyer and your agent has a pocket listing "just for you" why are you seeing the property but not other buyers? What criteria is being used by the agent to determine that you are the buyer that should write an offer on this property?
- Do pocket listings violate the Fair Housing Act passed in 1968? The Fair Housing Act protects home buyers and others engaging in housing-related activities against discrimination. It prohibits discrimination in housing because of race, disability, color, familial status, national origin, religion, and sex. Is the agent you are working with violating the fair housing act by giving you preferential treatment?
Does A Pocket Listing Benefit the Seller?
- Do you want your agent to handpick the buyers who view your home for sale?
- Are you getting the best price for your home if only a few potential buyers are seeing it?
- Why wouldn't you want as many buyers as possible to see your home?
- What criteria is your agent using to determine who should purchase your home?
The truth is pocket listings are another confusing issue in residential real estate. To learn more about how to protect yourself as a buyer or seller, read the report below.
The Consumer Federation of America released a report in January 2019 titled, The Agency Mess: Home Buyer and Seller Confusion and Costs Related to Diverse and Complex State Laws About the Role and Responsibility of Real Estate Agents.